Mr. Cohen said he does not see the perception changing permanently because the recent volatility has occurred just before the Federal Reserve interest rate policy meeting, which begins Tuesday. Banks typically experience wide swings in the trading days leading up to the Fed's policy meetings.

David Trone, a banking analyst with Credit Suisse First Boston, agreed it would take a "bigger picture event"-such as an Asian crisis or a credit quality crisis-to change the way investors view the sector.

"Right now people are just trying to make some order of things," Mr. Trone said. The Fed could announce a rate hike by Wednesday.

On Friday, banks eased some losses from early in the week but remain below valuations of just six weeks ago.

The Standard & Poor's bank index increased 1.51% and the Dow Jones industrial average 0.17%. The Nasdaq bank index was up 0.75%, and the S&P 500 index fell 0.04%.

"What you're seeing is the market starting to look beyond" the Fed meeting on Tuesday and Wednesday, said Edward Najarian, a banking analyst at Wheat First Union.

There may be a significant one-time gain or loss for the sector after the meeting, depending on what the Fed does. Then, investors will begin focusing on upcoming second-quarter earnings reports, the analyst said.

"We might have some underperformers, but I expect them to bounce back pretty quickly," Mr. Najarian said.

But banks still have their doubters.

Timothy Hayes, senior equity strategist at Ned Davis Research in Venice, Fla., does not include banks among 120 industries he follows in the market.

"Based on our view of the group's strength relative to the rest of the market and the price performance and fundamentals of individual stocks, it isn't very promising for banks," Mr. Davis said.

Meanwhile, Ruchi Madan of PaineWebber on Friday raised her rating on shares of Bank One Corp. from "attractive" to "buy," expressing confidence about intentions for Internet banking, including operating an independent bank. The stock rose 1.03%, to $55.25.

Ms. Madan said she was "concerned" that management might make big outlays up front in return for a longer-term profit, but she said plans laid out on Thursday "may convince investors that this should no longer weigh on the stock."

Mr. Cohn of Ryan Beck downgraded shares of Imperial Bancorp of Inglewood, Calif., from a "strong buy" to a "buy" on the basis of reduced expectations. The stock was unchanged at $20.0625.